Focus on key rate decision occurring later in the week

Notes/Observations

- Focus on key rate decisions during the week (FOMC on Wed, BOJ, SNB on Thurs).

Asia

- China PBOC cut the 14-day reverse repo rate by 10bps to 2.15% (1st use of 14-day reverse repos since January 30th.). It maintained the 7-day reverse repos at 2.00%.

- Japan closed for holiday.

Taiwan

- President Biden stated that US forces would defend Taiwan if there was a Chinese invasion.

- USGS reported 7.2 Earthquake 86.7 km (53.7 mi) E of Yujing, Taiwan.

Mid-East

- Iran Supreme Leader Khamenei reportedly currently on bed rest after falling 'gravely ill'.

Europe

- ECB's Lane (Ireland, chief economist) reiterated stance that ECB could raise interest rates over the next several meetings and into the early part of 2023.

- ECB's Nagel (Germany, hawk): ECB to continue to raise rates to tame inflation.

- EU Commission confirmed to propose suspension of 65% of EU budget funds (roughly €7.5B) for Hungary from three programs under EU's cohesion policy [**Note: first time when EU Commission tests its 'democracy sanction'].

- German Fin Min Lindner: Prices are soaring and is the biggest danger for economic growth.

- Start of strike at Liverpool port.

- UK closed for QE2 funeral.

Americas

- Goldman Sachs analysts cut 2023 US GDP forecast from 1.5% to 1.1% while maintaining 2022 growth forecast at 0.0%.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.45% at 406.40, FTSE closed, DAX -0.40% at 12,689.68, CAC-40 -0.91% at 6,022.01, IBEX-35 % at #, FTSE MIB -0.66% at 21,964.00, SMI -0.38% at 10,570.20, S&P 500 Futures -0.60%].

Market Focal Points/Key Themes: European indices open generally lower and stayed under pressure during the early part of the session; all sectors start the day in the red; UK closed for Queen’s funeral; less negative sectors include materials and utilities; sectors among those leading to the downside are consumer discretionary and industrials; TF1-M6 merger falls through; earnings expected during the upcoming US session include AutoZone.

Equities

- Consumer discretionary: CD Projekt [CDR.PL] +10% (Netflix premiere).

- Energy: TotalEnergies [TTE.FR] -1.5% (natural gas project).

- Healthcare: Valneva [VLA.FR] -12% (collaboration termination).

- Industrials: Volkswagen [VOW3.DE] +1%, Porsche [PAH3.DE] +2.5% (Porsche IPO plans).

- Telecom: Bouygues [EN.FR] -1.5%, TV1 [TFI.FR] -2%, Metropole Television [MMT.FR] -4% (proposed merger between the TF1 and M6 Groups abandoned).

Speakers

- EU Commission proposed 'Single Market Emergency Instrument' anti-crisis plans to ask companies to accept priority rated orders for critical products to avert supply crisis.

- Poland Central Bank (NBP) member Wnorowski stated that saw no reason for Polish main rate to top 7% (**Note: Current Base Rate is at 6.75%.

- Czech Central Bank's Frait (new member) stated that recent figures suggested might be past peak of inflation.

- Russia govt spokesperson Peskov stated that Ukraine claims about war crimes in Kharkiv region were lies, same scenario as in Bucha.

- China Foreign Ministry spokesperson Mao stated that the govt deplored and firmly opposed US Pres Biden's comments on Taiwan. Stressed that China reserved the right to take all necessary measures; Had lodged stern representations. Biden breached US vow to not support Taiwan independence.

- Iran Foreign Ministry spokesperson Kanaani: stated that nuclear talks were possible on sideline of UN General Assembly in NY this week.

- OPEC+ members reportedly missed oil production targets by ~3.6Mbpd in total in Aug.

Currencies/fixed income

- FX markets quiet with both japan and UK closed. Focus on key rate decisions during the week (FOMC on Wed, BOJ, SNB and BOE on Thurs).

- USD holding on to recent gains as markets priced in at least another 75 basis point by the Fed this week. Greenback also aided by safe-haven flows on growing global recession risks as central banks combat inflation.

- BOE expected to deliver another rate hike while Fin Min Kwarteng's emergency mini-budget, to be delivered on Friday to provide more details about support to help ease the country's cost-of-living crisis.

- BOJ was widely expected to stick with massive stimulus on Thursday despite its CPI staying above target level for numerous months.

Economic data

- (CH) Swiss weekly Total Sight Deposits (CHF): 754.5B v 753.4B prior; Domestic Sight Deposits: 638.9B v 638.6B prior.

- (HK) Hong Kong Aug Unemployment Rate: 4.1% v 4.2%e.

- (EU) Euro Zone July Construction Output M/M: % v -1.3% prior; Y/Y: % v 0.1% prior.

Fixed income issuance

- (NO) Norway sold NOK8.0B vs. NOK8.0B indicated in 12-month bills; 3.30% v 2.11% prior; bid-to-cover: 1.49x v 1.36x prior.

Looking ahead

- (UR) Ukraine Central Bank (NBU) Sept Minutes.

- (SK) Slovakia Debt Agency (Ardal) to sell 2024, 2030, 2036 and 2051 Bonds.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-3.0B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (PT) Portugal Aug PPI M/M: No est v 0.7% prior; Y/Y: No est v 24.8% prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (UK) No Daily Baltic Dry Bulk Index (QE2 funeral).

- 08:30 (CA) Canada Aug Industrial Product Price M/M: -1.0%e v -2.1% prior; Raw Materials Price Index M/M: No est v -7.4% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.1-5.3B in 3-month, 6-month and 12-month bills.

- 12:00 (CA) Canada to ell 10 Year Bonds.

- 10:00 (US) Sept NAHB Housing Market Index: 47e v 49 prior.

- 12:00 (CO) Colombia July Economic Activity Index (Monthly GDP) Y/Y: 6.5%e v 8.5% prior.

- 12:00 (CA) Canada to ell 10 Year Bonds.

- 16:00 (US) Weekly Crop Progress Report.

- 19:30 (JP) Japan Aug National CPI Y/Y: 2.9%e v 2.6% prior; CPI Ex-Fresh Food (Core) Y/Y: 2.7%e v 2.4% prior; CPI Ex-fresh food/energy (Core-Core) Y/Y: 1.5%e v 1.2% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v +1.3% prior.

- 21:15 (CN) China PBOC Monthly Loan Prime Rate (LPR) Setting: Expected to leave 1-Year and 5-Year rates at 3.65% and 4.30% respectively.

- 21:30 (AU) Reserve Bank of Australia (RBA) Sept Minutes.